By AZAM AHMED and BEN PROTESS

Published: June 5, 2012

8:40 p.m. | Updated

Jon S. Corzine and other top executives of MF Global could face legal claims over their ''negligence'' at the helm of the bankrupt brokerage firm, according to a report issued by a court-appointed trustee on Monday. The report sheds new light on the largest Wall Street bankruptcy since the financial crisis.

The trustee, James W. Giddens, said he would decide whether to pursue litigation to recover money for customers, who are missing about $1.6 billion, within 60 days.

Seven months after government agencies began criminal and civil investigations into MF Global, Mr. Giddens's efforts may end up as the gravest threat to those who were at the center of the collapse. The government is struggling to unearth criminal wrongdoing at the firm, as some investigators privately express doubt that anything more than a state of chaos and sloppy record-keeping is to blame for the missing funds.

Since MF Global filed for bankruptcy on Oct. 31, farmers, hedge funds and other customers have been without at least a third of their money. Mr. Giddens is charged with recovering those funds.

In addition to Mr. Corzine, the trustee said he was considering suing Henri Steenkamp, the chief financial officer, and Edith O'Brien, an assistant treasurer in the firm's Chicago office who oversaw transfers of customer money. Mr. Giddens is also taking on institutions, including banks like JPMorgan Chase, that received customer money in the chaotic days before the firm went under.

A spokesman for Mr. Corzine said: ''The trustee's report is consistent with Mr. Corzine's Congressional testimony that he did not direct or intend to direct the misuse of customer funds. We simply do not agree with the trustee's suggestion that Mr. Corzine was negligent or there is any other basis to sue him.''

The 275-page report, based on interviews with more than 100 people and a review of hundreds of thousands of documents, is the most comprehensive telling yet of how the brokerage firm fell and the money vanished. It details MF Global's rapid downfall, capturing the recklessness of managers and woefully inadequate risk controls. The firm, entrusted with about $6 billion of client money, sometimes relied on ''oral'' reporting to track the cash it held, the report shows.

While MF Global's weak financial position was widely known, the report shows how a longstanding cash problem grew during Mr. Corzine's tenure, as the company took on more risk to turn a profit. And, for the first time, it exposes internal disputes over how to use money in customer accounts to ease the liquidity squeeze.

Those concerns escalated in the summer of 2011, prompting an assistant MF Global treasurer to write in an Aug. 11 e-mail that she was having to spend ''hours every day shuffling cash and loans from entity to entity,'' the report says.

The company even prepared an action plan in the event of a downgrade from the ratings agencies and other negative news. The document listed ways to safeguard cash reserves, keep clients and stay alive should the market react poorly to the news. But the document ''seriously underestimated both the speed and extent of demands on liquidity'' by a magnitude of $600 million to $1 billion, the report states.

The report from Mr. Giddens is not the final chapter in the MF Global story. Louis Freeh, the trustee overseeing the bankruptcy, is also expected to file a report related to his investigation. And Congressional investigators are expected to release their findings in a report this summer, ''to figure out how money doesn't go missing in the future,'' said Representative Randy Neugebauer, Republican of Texas, who is overseeing the report.

Mr. Giddens's findings largely focus on the tenure of Mr. Corzine, the former head of Goldman Sachs who took over at MF Global in March 2010, fresh off an election loss for a second term as the Democratic governor for New Jersey.

Mr. Corzine hoped to transform MF Global from a sleepy commodities brokerage firm into a something more akin to a miniature Goldman Sachs. He added new lines of business and began making bets with the firm's own capital, including a bet on the debt of shaky European nations. But as the bet grew to $6 billion, liquidity became a problem for the firm. The bet, the trustee's report notes, ''presented substantial liquidity risks.''

The cash needs prompted internal disputes at MF Global about how to resolve the demands - including through the use of customer money.

While customer money must be kept separate from the firm's, it is common for a company like MF Global to add its own money to customer accounts as a buffer in the event of a volatile market move. The firm's money, called excess funds, can be withdrawn by the company at will.

But ''confusion and differences of opinion existed within MF Global regarding the extent to which excess funds might be available to meet liquidity,'' the report said.

Nevertheless, senior management began relying increasingly on this money to stay afloat, the report says. The firm initially made ''relatively small'' transfers from customer accounts, but they became ''nearly a daily event'' and the money was sometimes kept overnight. At one point, the report said, top executives explored making $250 million transfers on ''a regular overnight basis'' to support the firm's securities business, but some internal officials viewed the idea as too dangerous for customers.

An internal conflict also arose around the use of a loophole that allowed the firm to tap customer money sitting overseas, not simply the excess. The firm used this ''alternative calculation'' when reporting its customer account levels to regulators. But internally, it also tracked the figures using the more conventional method, a more accurate depiction, the report says.

Last summer, the Financial Industry Regulatory Authority, Wall Street's self-regulator, became worried about MF Global's European debt positions and ordered the firm to set aside additional capital. The company ultimately complied, but the rebuke from the regulator rattled investors, and incited a crisis of confidence that paved the way to the firm's collapse.

As Europe was mired in upheaval, the positions prompted rating agencies to cut MF Global's credit rating in late October, a final straw for a market already on edge. Panic ensued as trading partners and customers demanded money from the firm. Chaos reigned internally, too, with money flowing between divisions and out of the firm.

The report highlights the banks and other companies on the receiving end of transfers involving customer money. As MF Global's main bank, JPMorgan Chase was a central recipient of customer money in that final week. Other banks in the trustee's line of sight include Bank of New York Mellon.

The actions against the deep-pocketed financial institutions may prove more fruitful than a lawsuit filed against MF Global executives. While Mr. Corzine remains a wealthy man, his liability is uncertain. And even if executives are found culpable, a company insurance policy may cover their liabilities.

Even as the trustee outlined in his report all of the various cash demands placed on MF Global during its final days, he issued one of his own on Monday. Mr. Giddens sought approval for his legal fees through February. The price tag: $17 million.

This is a more complete version of the story than the one that appeared in print.

PHOTOS: Jon S. Corzine, left, testifying before a House panel last year. (PHOTOGRAPH BY PHILIP SCOTT ANDREWS/THE NEW YORK TIMES) (B1); James Giddens is the trustee in MF Global's bankruptcy. (PHOTOGRAPH BY ANDREW HARRER/BLOOMBERG NEWS) (B5)